Recently, Circuit City made news because of an employee’s reaction to a spoof published in Mad Magazine.
You can check out the faux ad here.
I read Mad Magazine as a kid, years ago — the exact number of years ago is not relevant; most of the usual gang of idiots from when I read it are still alive and still writing for it. (How’s that for a career plateau?) And now they have a website.

I read Mad Magazine as a kid, years ago — the exact number of years ago is not relevant; most of the usual gang of idiots from when I read it are still alive and still writing for it. (How’s that for a career plateau?) And now they have a website.

As well as a bit of controversy because a Circuit City employee saw the spoof, and didn’t like it, and decided to respond.

How?
Apparently 40 Circuit City stores also sell magazines, including Mad Magazine. The company could’ve just pulled the issue, but instead, an employee instructed all 40 stores to “remove” and “destroy”all copies of the offending issue.

That email got out, and the spoof turned into an incident. Ultimately, a Circuit City “PR guy,” James Babb, wrote a self-deprecating letter of apology, noting that he had written to the editors of Mad Magazine, explaining that “As a gesture of our apology and deep respect for the folks at MAD Magazine, we are creating a cross-departmental task force to study the importance of humor in the corporate workplace and expect the resulting Powerpoint presentation to top out at least 300 pages, chock full of charts, graphs and company action plans.”

The result: Mad Magazine got a significant boost because no one really has paid any attention to the magazine. (Some online posts mentioned being surprised that Mad Magazine was still publishing.) Circuit City, on the other hand, is taking a hit for not having a sense of humor and for mishandling the situation. And way more people know about the Mad spoof than would have seen it or would have talked about it if Circuit City had done nothing.

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This is known as the “Streisand effect,” defined by Wikipedia as “a phenomenon on the Internet where an attempt to censor or remove a piece of information backfires, causing the information to be widely publicized. Examples are attempts to censor a photograph, a file, or even a whole website, especially by means of cease-and-desist letters. Instead of being suppressed, the information sometimes quickly receives extensive publicity, often being widely mirrored across the Internet, or distributed on file-sharing networks.[1][2]”
(The term was coined after Barbra Streisand sued a photographer who had taken and posted an aerial photo of her house in a publicly available database.)

We can see the Streisand effect at play recently with Boing Boing,
when Xeni Jardin, a contributor to the site, “unpublished” — a nicer way to say deleted — “all references to a blogger named Violet Blue,” according to a New York Times article, “Poof! You’re Unpublished.” The mere act of “unpublishing” became known, and had the opposite of the intended impact.
So, here are four variables to consider about managing corporate reputation:

What’s being said?

What kind of reaction is being generated by readers?

Where is the statement appearing?

Who wrote it?

By evaluating each variable, you can make the decision as to the appropriate way to respond. What’s important to keep in mind is the need to keep a sense of humor and the need to take emotion out of the process (this is the first mistake Circuit City made).
For example, we had a client once about whom someone was posting very negative statements. We looked at those variables, and determined:

What was being said was very negative and had no basis in fact. The company
could have sued, and would’ve have had a decent case.

These posts were not generating any attention, buzz or links. In part, it may
have been a topic that most people didn’t understand or care about or because the rants were rambling and incoherent and filled with typos and bad grammar.

These posts also were published on obscure sites, with dubious credibility.

The person was writing deeply-felt pieces but had no credibility.

This last factor is not always important, however. For example, a New York Times article this week, “On Wall St., Reputation Is Fragile”
by Andrew Ross Sorkin, wrote about the downfall of the lesser known of the two Steven Rattner working on Wall St. The reason: posts with all kinds of allegations about Rattner were written by the ex-husband of the woman with whom Rattner had had an affair several years earlier;
the posts also contained inaccuracies, according to the Times. Yet because the posts were so widely available, Rattner, who had been called a rising star, instead resigned from his job.
In the case of Circuit City, the “who” didn’t matter. I’d say the fact that it appeared in Mad Magazine also counted against taking any action; that might be different if Mad targets the ideal Circuit City customer. If Andy Borowitz wrote something similar in his “Next Month’s Business News” column in Conde Nast Portfolio, I think that could be different
if only because Portfolio readers could be investors or shortsellers of Circuit City stock. (However, I would have advised against taking action, even if the spoof had been published in Portfolio.)
As for evaluating the reaction the spoof generated, Circuit City could have done a number of searches to see if there were any. But disposing of a few copies from 40 stores was far from being the right call.
There are steps companies and people can take when the media gets the facts wrong. But you can’t do anything with humor or with opinion.